Canberra has not threatened to withdraw from the $256 billion project despite the escalating cost of the warplanes, but says it shares Britain's concerns.

The Defence Department is negotiating with the Bush administration to ensure Australian military and defence contractors have access to software codes and stealth technology to maintain and service the F-35s it is planning to take delivery of in 2014.

A bill introduced to the US Congress in 2003, which would have given Australia and Britain access to otherwise secret technology, has stalled and is unlikely to be revived.

A report in London's Sunday Times newspaper cited Ministry of Defence officials as saying Britain was developing a "PlanB" to purchase an alternative fighter - a modified Eurofighter - for its navy if it cannot overcome concerns over the project costs and technology transfer.

Any pullout by Britain, which has invested $2billion and was slated to buy 150 F-35 aircraft for its air force and navy, would force up the costs for other countries planning to buy the fighter jet.

The JSF project, already plagued by cost overruns, aims to build 2500 of the sensor-evading stealth fighters for the US, and hundreds of others for its allies under the most ambitious program of its kind.

Australia is slated to spend about $16 billion to buy up to 100 F-35s to replace its ageing F/A-18 fleet. But Defence officials warned this week Canberra could buy just 50 if the aircraft becomes prohibitively expensive.

The JSF project has run into other problems, with the Pentagon budget to be slashed by $270million this year and cuts of up to 500 reported in US orders.

Australian Strategic Policy Institute analyst Aldo Borgu said yesterday any pullout by Britain would compound the cost blowouts on the project.

"Though I'm sure the Brits are working overtime to avoid a pullout, if things go pear-shaped it could prove not only a blow to the prestige of the JSF project but also force up the cost of each aircraft for other buyers," Mr Borgu said.

Labor defence spokesman Robert McClelland called on Defence Minister Robert Hill to immediately clarify the status of Australia's bid for the F-35 fighters.

Senator Hill conceded that the US bill that would have provided Australia and Britain with an exemption on technology transfer rules had stalled in the US Congress and said Canberra was investigating other ways to "get around the issue".

"The Bush administration is aware of Australia's and Britain's concerns and they may have discretion under other licensing arrangements to give us access (to the technology)," Senator Hill told The Australian.

He said it was "no secret" that the JSF program could face cuts under Washington's review of its military spending.

Senator Hill conceded Australia might not need to buy as many as 100 fighters "because the fighter would be more capable than anything we've ever seen".

On suggestions the US air force would scrap its orders for the version Australia was interested in, Senator Hill said he understood the USAF was "strongly resisting" the move.

He was also unconcerned at reports of a threatened British pullback from the fighter project, saying Britain was "too heavily committed" to withdraw.

Source: The Australian